Payroll journal entry in Ireland: posting each pay run correctly

Your payroll report summarises each run into a handful of totals.

• Gross pay: the total salaries and wages before deductions.
• Employer PRSI: the employer’s social insurance cost on top of gross pay.
• Employee deductions owed to Revenue: PAYE income tax, USC and employee PRSI.
• Other deductions: pension contributions, or amounts owed to other third parties.
• Net pay: what employees actually receive.

Debit wages and salaries with gross pay, and debit employer PRSI as a separate expense so you can see the real cost of employment. Credit a Revenue payroll liability account with PAYE, USC, employee PRSI and employer PRSI together. Credit a pensions or other deductions liability with those amounts, and credit a net wages control account with net pay.

The debits and credits should balance exactly. If they do not, a figure from the payroll report has been missed. Check the report’s totals page again, and look in particular for employer pension contributions or benefits that some payroll reports show on a separate page.

When net pay leaves the bank, it clears the net wages control account. When you pay Revenue, the payment clears the Revenue payroll liability. Pension payments clear the pensions liability. At any point, each liability should equal what is still unpaid; if one keeps growing, a payment has been coded somewhere else.

Since 2024, employers report certain payments to Revenue under the Enhanced Reporting Requirements, including small benefits, remote-working daily allowances, and travel and subsistence, with the date and amount of each. Record these in the books under clearly named accounts. When the ledger uses the same categories as the reporting, checking one against the other is quick.

Post after every pay run, weekly or monthly as you pay. A single journal at year end hides errors for twelve months and makes it hard to reconcile the payments to Revenue. Regular posting also keeps the monthly profit and loss accurate, since wages are usually the largest cost.

These show up repeatedly when accountants review payroll postings.

• Posting net pay as the wage cost, which understates both expense and liabilities.
• Leaving employer PRSI out of the journal entirely.
• Coding the payment to Revenue as an expense instead of clearing the liability.
• Mixing director pay with director loan repayments.

Suppose a monthly pay run shows gross pay of €10,000, employer PRSI of €1,115, deductions for PAYE, USC and employee PRSI of €2,400, pension deductions of €300 and net pay of €7,300. These figures are for illustration only; your payroll report gives the real ones.

The journal debits wages €10,000 and employer PRSI €1,115, a total of €11,115. It credits the Revenue payroll liability with €3,515, being the €2,400 of employee deductions plus the €1,115 of employer PRSI, the pensions liability with €300 and net wages with €7,300, also a total of €11,115. When net pay, the Revenue payment and the pension payment leave the bank, each clears its own liability to zero.

HelloBooks does not run Irish payroll. Today you record each pay run as a journal using the totals from your payroll product or bureau, and the AI matches the net-pay and Revenue payments when they appear in the bank. Importing payroll journals directly from Irish payroll software is coming soon.